Business documents: Practice Questions

Which business document provides a summary of all transactions between a supplier and a credit customer over a period of time, usually one month?

Which business document is issued by a supplier to its customer to reduce the amount owed, typically due to returned goods or an overcharge?

Which business document is issued by a seller to a customer upon receiving cash for goods or services?

What is the primary purpose of a statement of account issued by a supplier to a credit customer?

A customer returns faulty goods to a supplier. Which pair of business documents would be exchanged between them to process the return?

Identify the business document used by a trader to provide the bank with details of the individual cheques and total cash being deposited into the business bank account.

A supplier sends a statement of account to a credit customer at the end of the month. Identify two specific items of information included in this document that help the customer reconcile their own records.

A business receives a monthly bank statement which shows a credit balance of \(\$1,200\). At the same time, the business's cash book shows a debit balance. Explain the reason for this difference in terminology from the perspective of both the bank and the business.

(a) Henry is a credit customer who purchased goods on credit from a supplier, S & Co. Upon inspection, Henry found that goods with a list price of \( \$500 \) were damaged and returned them immediately. Identify the business document Henry would send to S & Co. to inform them of the return and request a reduction in his account balance.

(b) S & Co. accepted the return and issued a document to Henry to confirm the reduction in the amount he owes. Identify this document.

(c) State the name of the book of prime entry in which Henry would record this transaction.

A trader, Tarek, completed several transactions during the month of August. For each of the following scenarios, identify the business document that would be used:

(a) Tarek sells goods to a customer on credit.
(b) A customer returns faulty goods to Tarek that were previously sold on credit.
(c) Tarek receives a summary of all transactions from a supplier at the end of the month.
(d) Tarek receives payment by cheque from a customer for an outstanding invoice and provides proof of payment.

For each document identified in (a), (b), and (c), state whether the document is issued by Tarek or received by Tarek from an external party.